Merck KGaA · XETR:MRK
Merck KGaA — Merck KGaA, Darmstadt, Germany — Q1 2021 Earnings Presentation
41 slides from Merck KGaA's earnings presentation, May 12, 2021
Slide 1: BIG 3 drive strong start into the year, mobilizing for future growth
BIG 3 drive strong start into the year, mobilizing for future growth Q1 2021 results Belén Garijo, CEO Marcus Kuhnert, CFO May 12, 2021
Slide 2: Disclaimer
Disclaimer Publication of Merck KGaA, Darmstadt, Germany. In the United States and Canada the group of companies affiliated with Merck KGaA, Darmstadt, Germany operates under individual business names (EMD Serono, Millipore Sigma, EMD Performance Materials). To reflect such fact and to avoid any mis
Slide 3: Disclaimer: Forward-Looking Statements
Disclaimer Cautionary Note Regarding Forward-Looking Statements and financial indicators This communication may include “forward-looking statements.” Statements that include words such as “anticipate,” “expect,” “should,” “would,” “intend,” “plan,” “project,” “seek,” “believe,” “will,” and other wor
Slide 4: Agenda
Agenda Executive summary Financial overview Outlook 3 Merck KGaA, Darmstadt, Germany Q1 2021 Results Presentation | May 12, 2021
Slide 5: Executive summary
Executive summary 01
Slide 6: Highlights: BIG 3 drive growth, especially Process Solutions
Highlights: BIG 3 drive growth, especially Process Solutions Operations Financials Healthcare: Fertility organic growth accelerating to 22%; Q1 organic sales: +12.2% 20% organic growth of Oncology as Bavencio® sales double while Erbitux® is growing 10%; Mavenclad® up 26% Q1 organic EBITDA pre: +36.3
Slide 7: 27% organic growth in Life Science drives strong Group sales and EBITDA pre growth
27% organic growth in Life Science, moderate Healthcare growth & stable Electronics drive very strong organic Group sales and EBITDA pre growth Q1 YoY Net Sales Q1 YoY EBITDA pre Organic Currency Portfolio Total 36.3% €1,511 m Healthcare 3.5% -5.9% -1.2% -3.6% €1,181 m -8.3% -0.1% Life Science 26.7%
Slide 8: Life Science demand drives strong growth in North America and Asia-Pacific
Life Science demand drives particularly strong growth in North America and Asia-Pacific Regional breakdown of net sales [€m] Regional organic development Europe +4.7% ▪ APAC: strong Life Science and org. Healthcare growth while Electronics 29% ~ stable with Semi offsetting Display ▪ Europe: Growth i
Slide 9: Financial overview
Financial overview 02
Slide 10: Q1 2021: Overview
Q1 2021: Overview Key figures Comments [€m] Q1 2020 Q1 2021 Δ ▪ Net sales growth of 6% driven by 12% Net sales 4,370 4,631 6.0% organic growth and FX burden of -6% EBITDA pre 1,181 1,511 27.9% ▪ EBITDA pre increase, driven particularly Margin (in % of net sales) 27.0% 32.6% by operating leverage in
Slide 11: Q1 2021: Reported figures
Q1 2021: Reported figures Reported results Comments [€m] Q1 2020 Q1 2021 Δ ▪ Strong performance across all sectors EBIT 716 1,043 45.7% particularly in Life Science drives 46% Financial result -98 -59 -40.0% EBIT growth Profit before tax 617 984 59.4% ▪ Reduced interest expense and lower LTIP provis
Slide 12: Healthcare: strong Fertility & Oncology performance
® Healthcare: strong Fertility & Oncology performance, while Mavenclad remains impacted by depressed dynamic market Healthcare P&L Net sales bridge [€m] IFRS Pre €1,701 m 3.5% €1,639 m Q1 2020 Q1 2021 Q1 2020 Q1 2021 -5.9% -1.2% Net sales 1,701 1,639 1,701 1,639 * M&S -423 -370 -423 -365 Q1 2020 Org
Slide 13: Life Science: strong core business and rising COVID-19 demand fuel record growth
Life Science: strong core business and rising COVID-19 demand fuel record growth, particularly in Process and Research Solutions Life Science P&L Net sales bridge [€m] IFRS Pre 26.7% 0.0% €2 131 m €1 769 m Q1 2020 Q1 2021 Q1 2020 Q1 2021 -6.2% Net sales 1,769 2,131 1,769 2,131 M&S * -498 -501 -497 -
Slide 14: Electronics: Semi growth and recovering Surface compensate Display decline
Electronics: year-over-year and vs. Q4 2020 Semi growth as well as recovering Surface compensate Display Solutions decline Electronics P&L Net sales bridge [€m] IFRS Pre €900 m 0.2% 0.0% €861 m Q1 2020 Q1 2021 Q1 2020 Q1 2021 -4.5% Net sales 900 861 900 861 M&S * -136 -135 -134 -135 +0.0% Q1 2020 Or
Slide 15: Balance sheet
Balance sheet Assets [€bn] Liabilities [€bn] 43.9 43.9 41.8 2.2 41.8 Cash & cash equivalents 1.4 3.2 3.7 Receivables 3.3 3.5 Inventories 19.0 17.0 Net equity Intangible assets 23.6 24.3 12.3 12.1 Financial debt 2.7 2.4 Payables/refund liabilities Property, plant 3.5 4.0 Provisions for employee benef
Slide 16: Cash flow statement
Cash flow statement Q1 2021 – cash flow statement Cash flow drivers [€m] Q1 2020 Q1 2021 Δ ▪ Strong increase in profit after tax driven particularly by Life Science, further Profit after tax 458 748 290 ® boosted by Bavencio milestones D&A 431 424 -7 ▪ Provisions largely reflect various favorable de
Slide 17: Outlook
Outlook 03
Slide 18: Sustainability strategy enhanced with clear commitment to new targets
Sustainability strategy enhanced, leveraging strengths with clear commitment to new targets Who we are Targets Integration Innovation Power Goal #1: Dedicated to human progress Integrated ▪ Merck KGaA, Darmstadt, Germany is a leading science and technology In 2030, we will advance human progress for
Slide 19: Latest COVID-19 assumptions for 2021
Latest COVID-19 assumptions for 2021 Overarching assumptions ▪ Increasing vaccination penetration across large populations in all major regions as of summer ▪ Global gradual easing of lockdowns to continue; vaccination efforts expected to keep up with virus mutations ▪ Overall improvement in the cou
Slide 20: Life Science: Upside potential for Process Solutions materializing
Life Science: Upside potential for Process Solutions materializing amid increasing capacity; Research Solutions gaining momentum as well Organic growth versus LY by Quarter ▪ Successful capacity ramp-up 38% accelerated further ▪ Roughly half of additional growth 27% since Q2 2020 has been COVID-19 2
Slide 21: Independent real-world data differentiates Mavenclad
Independent real-world data (RWD) differentiates Mavenclad® ▪ A high-efficacy DMT that demonstrates full antibody response to COVID-19 vaccination ▪ Differentiated vs. other high-efficacy therapies in light of COVID-19 vaccinations for MS patients Total Protective humoral Patient population N=125 im
Slide 22: Full-year 2021 guidance
Full-year 2021 guidance Net sales: Organic: +10% to +12% YoY FX: -2% to -4% YoY ~€18.5 – 19.5 bn EBITDA pre: Organic: +16% to +20% YoY (excl Biogen1) FX: -2% to -4% YoY ~€5.4 – 5.8 bn EPS pre: ~€7.50 – 8.20 1 Q3 20 reversal of the provisions for the patent litigation proceedings for Rebif in the amo
Slide 23: 2021 business sector guidance
2021 business sector guidance1 Net sales EBITDA pre Healthcare ▪ Organic: +7% to +10% ▪ Organic:+12% to +15% YoY ▪ Mainly driven by ® ® (excl Biogen2) Mavenclad , Bavencio and recovery ▪ FX: -5% to -7% YoY of Fertility ▪ ~€2,000 – 2,100 m ▪ Base business organically around stable Net sales EBITDA pr
Slide 24: Appendix
Appendix
Slide 25: Additional financial guidance 2021
Additional financial guidance 2021 Further financial details Corporate & Other EBITDA pre ~ €-440 to -490 m Interest result ~ €-220 to -245 m Effective tax rate ~22% to 24% Capex on PPE ~€1.4 to 1.5 bn FY 2021 hedge ratio ~70% Hedging/USD assumption at EUR/USD ~1.17 2021 Ø EUR/USD assumption ~1.19 t
Slide 26: Underlying tax rate guidance lowered to new range of 22% to 24%
Underlying tax rate guidance lowered to new range of 22% to 24% Tax rate development 2018-2020 and from 2021 onwards 40.0% Old guidance range ~24 - 26% New guidance range ~22 - 24% Rationale for update 30.0% Strong profit growth in Life Science results in 25.2% 25.4% 24.2% 24.0% different profit 20.
Slide 27: Balanced maturity profile: Lower refinancing risks & higher flexibility
Balanced maturity profile: Lower refinancing risks & higher flexibility Maturity profile as of March 31, 2021 Coupon 3.250% [€ m/US $ m] 0.125% 2.950% 1.375% 1,600 1.625% 3.375% 1.625% 2.875% 1,000 0.500% 0.875% 0.005% 500 0.375% 2.625% 1 000 1,000 750 750 800 550 600 500 600 317 2021 2022 2023 2024
Slide 28: Healthcare organic growth by franchise/product
Healthcare organic growth by franchise/product Q1 2021 organic sales growth [%] by key product [reported €m] 227 -17% 295 217 -2% 234 219 10% 211 186 18% 167 126 -10% 150 107 -1% 114 147 26% 123 62 102% 33 Q1 2021 Q1 2020 27 Merck KGaA, Darmstadt, Germany Q1 2021 Results Presentation | May 12, 2021
Slide 29: Neurology & Immunology: Mavenclad sales +26% YoY
Neurology & Immunology: Mavenclad® sales +26% (org.) YoY, sequential decline of ~4% (org.) driven by third COVID-19 wave Sales development NDI, [€m] Dynamic market volume [R3W] 1 ▪ Market share: Mavenclad® share continues to grow within COVID-19 driven decline of ~20% HE segment, with COVID-19 [€m]
Slide 30: Oncology: Bavencio showing strong growth; Erbitux growing 10%
Oncology: Bavencio® showing strong YoY and sequential growth post UC 1L approvals; Erbitux growing 10% organically ® ▪ 10% organic growth in Sales development Oncology, [€m] Erbitux net sales, [€m] Q1, despite supply agreement with Eli Lilly 300 org. org. org. org. org. 255 for U.S. demand falling [
Slide 31: Bavencio UC 1L launch update
Bavencio® UC 1L launch update: Significant opportunity to drive further growth by increasing the adoption of 1L maintenance therapy U.S. - ~10 months into launch, on track to changing the SOC: Newly diagnosed Platinum PT-based chemo1 Maintenance 1L Maintenance metastatic 85% eligble ~70% 1L treatmen
Slide 32: Fertility: 22% organic growth and strong recovery of Gonal-f
® Fertility: 22% organic growth and strong sequential recovery of Gonal-f ® Sales development Fertility, [€m] Gonal-f net sales, [€m] 200 192 186 org. org. org. org. org. 167 158 [€m] -3.5% -38.9% -1.3% 0.8% 22.0% 150 112 ▪ Strong Fertility growth of 400 100 +22% amid continued 350 recovery from COV
Slide 33: CM&E: Declining -4% as VBP impact offsets growth
CM&E: Declining -4% as growth in ME&A and LATAM are offset by VBP ® ® impact on Glucophage & Concor in China and tough comps in Europe ® Sales development CM&E, [€m] Glucophage net sales, [€m] org. org. org. org. org. ▪ Growth in ME&A (org. [€m] 20.9% 3.9% 2.4% -1.2% -4.2% 234 +31%) and LATAM (org.
Slide 34: Healthcare pipeline
Healthcare pipeline May 12, 2021 Phase I Phase II Phase III M1231 bintrafusp alfa berzosertib bintrafusp alfa xevinapant Bispec. MUC1xEGFR ADC TGFbeta trap/anti-PD-L1 ATR inhibitor TGFbeta trap/anti-PD-L1 IAP inhibitor Solid tumors Cervical cancer 1L Small-Cell Lung Cancer3 Biliary tract cancer 1L L
Slide 35: Healthcare catalysts for 2021
Healthcare catalysts – Significant developmental progress across Oncology and Immuno-Oncology portfolio expected in 2021 Oncology Immuno-Oncology Immunology Q2 2021 Q3 2021 Q4 2021 Q1 2022 Tepotinib (c-Met–inhibitor) EMA: Filing accepted in Q4 2020, review ongoing Bavencio® Bintrafusp alfa (Avelumab
Slide 36: BIG 3 - Process Solutions: upside potential continues to materialize
BIG 3 - Process Solutions: upside potential continues to materialize Sales development [€m] - org. growth [%] ▪ COVID-19 related projects in BioP Single Use 1,054 and Downstream remain key drivers of 975 ~ 50% additional pandemic-related growth 926 892 ▪ Unprecedented growth across all regions 802 3
Slide 37: Research Solutions: additional COVID-19 demand has gained momentum
Research Solutions: additional COVID-19 demand has gained momentum Sales development [€m] - org. growth [%] 644 ▪ Ongoing core business recovery boosted by 602 additional COVID-19 related demand 566 546 24.0% ▪ Unprecedented growth across all regions 501 particularly strong in Asia (>30% org.) and 1
Slide 38: BIG 3 - Semiconductor Solutions: DS&S phasing & FX effects mute growth
BIG 3 - Semiconductor Solutions: DS&S phasing & FX effects mute growth Sales development [€m] - org. growth [%] ▪ Q4 2020: strong underlying performance 483 474 476 boosted by favorable DS&S project phasing 469 468 ▪ Q1 2021: unfavorable DS&S project 20.0% phasing; more significant DS&S project cont
Slide 39: Adjustments in Q1 2021
Adjustments in Q1 2021 EBIT Adjustments [€m] Q1 2020 Q1 2021 Adjustments thereof D&A Adjustments thereof D&A Healthcare -27 2 10 0 Life Science 11 0 14 0 Electronics 35 0 17 3 Corporate & Other 17 0 6 0 Total 36 2 47 3 38 Merck KGaA, Darmstadt, Germany Q1 2021 Results Presentation | May 12, 2021
Slide 40: Financial calendar
Financial calendar Date Event May 12, 2021 Q1 2021 Earnings release August 5, 2021 Q2 2021 Earnings release September 9, 2021 Virtual Capital Markets Day November 11, 2021 Q3 2021 Earnings release April 22, 2022 Annual General Meeting 39 Merck KGaA, Darmstadt, Germany Q1 2021 Results Presentation |
Slide 41: Investor Relations contacts
CONSTANTIN FEST SVENJA BUNDSCHUH SARA HOFMANN Head of Investor Relations Assistant Investor Relations Assistant Investor Relations +49 6151 72-5271 +49 6151 72-3744 +49 6151 72-3321 constantin.fest@emdgroup.com svenja.bundschuh@emdgroup.com sara.hofmann@emdgroup.com ILJA DOERING GUNNAR ROMER AMELIE
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